U.S. stocks slip on inflation worries as Meta and Apple support bullish tech view

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US stocks slip on inflation worries

Highlights

The Dow falls 1.6%, S&P 500 loses 0.8%, and Nasdaq declines 0.7% for the week as inflation concerns and high yields persist.
Market odds of a September Federal Reserve rate hike rise to 87% from 58% a week earlier after producer and consumer prices exceed expectations.
Meta shares gain 5% and Apple nearly 4% on new AI releases and product launches, reinforcing tech sector optimism despite broader market declines.

Inflation signals and rate expectations drive market mood

As reported by CNBC, Friday's rally helps the Dow Jones Industrial Average, the S&P 500 and the Nasdaq recover part of their weekly declines after crude prices and bond yields cool from recent highs.

The rebound is not enough to return the major indexes to positive territory for the week. The Dow falls 1.6% in the holiday-shortened week, while the S&P 500 loses 0.8% and the Nasdaq declines 0.7%. West Texas Intermediate rises above $100 per barrel on Thursday for the first time in nearly four months as tensions between the U.S. and Iran escalate, and it still posts a weekly gain of more than 9% despite Friday's pullback.

The yield on the 10-year Treasury tops 4.95% on Thursday, its highest level since October 2023. Rising energy costs and higher yields reinforce concerns that inflation could remain elevated and push the Federal Reserve toward another rate increase at its Sept. 15-16 meeting.

Recent inflation data do little to calm those concerns. Producer prices rise 0.4% for the month, matching expectations, while the consumer price index also increases 0.4% month over month and 3.4% from a year earlier. Core CPI, which excludes food and energy, rises 0.3% on the month, slightly above expectations. According to the CME FedWatch tool, market odds of a September rate hike rise to 87% from 58% a week earlier, and expectations for another increase before year-end are also strengthening.

Meta and Apple strengthen AI investment case

Technology shares still provide pockets of optimism, with Meta Platforms and Apple both gaining on developments tied to artificial intelligence and new product strategy.

Meta's recent AI releases deepen the argument that its spending is producing commercially valuable assets. The Muse Spark 1.3 model, released on Sept. 2, emerges as a competitor to leading models from OpenAI and Anthropic. Meta then launches its Muse personal AI agent, integrating it with Facebook, Instagram and WhatsApp and extending its reach across 3.6 billion daily active users. Shares of Meta gain 5% on the week.

The company also trades at about 19 times 2027 earnings estimates despite expected 20% revenue growth in its core Family of Apps business. Its computing infrastructure adds further strategic flexibility, whether Meta uses that capacity internally or later offers excess compute through a public cloud.

Apple also draws a positive response after unveiling its foldable iPhone Duo, priced from $1,999, alongside the new iPhone 18 Pro and Pro Max. The higher-end models come with expected hardware upgrades and $100 price increases, which help offset rising memory costs without materially hurting demand in this view. Apple shares gain nearly 4% over the week.

Beyond hardware, Apple positions AI as a longer-term growth driver. Chief executive John Ternus describes the iPhone as an intelligent personal hub, supported by an upgraded Siri that can tap into more than 300,000 apps. That places Apple more directly in the emerging market for personal AI agents, where it is competing with products such as Meta's Muse and SpaceX's Grok Bot, while benefiting from deep integration across a device base used daily by hundreds of millions of people.

In our earlier article on inflation outpacing wage growth, we noted that August’s CPI increase left real wages shrinking as pay failed to keep up with rising prices. We also highlighted how higher gasoline and broader energy costs were a key driver of the inflation pickup, pushing households toward discount retailers and reinforcing concerns that elevated inflation could persist into the Fed’s next policy meeting.

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